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Peter Rost, M.D., is a former Pfizer Marketing Vice President providing services as a medical device and drug expert witness and pharmaceutical marketing expert. Judge Sanders: "The court agrees with defendants' view that Dr. Rost is a very adept and seasoned expert witness." He is also the author of Emergency Surgery, The Whistleblower and Killer Drug. You can reach him on rostpeter (insert symbol) hotmail.com. Please read the terms of use agreement and privacy policy for this blog carefully.

Carl Icahn: He's got something to say . . .

The corporate raider and multibillionaire is fed up with corporate America. So he did what any reasonable person would do . . . he started a blog, "The Icahn Report."

You just gotta luv a billionaire who does that and writes this:

Recently, there has been a great deal of outrage concerning the huge pay and severance packages awarded to a number of CEOs. There has been much criticism of the fact that CEOs earn 520 times that of the average worker. A great deal has been made of the scandalous actions of a number of CEOs and boards concerning the backdating of options. Sadly, a much deeper, more pernicious, more threatening problem of the future of our economy exists at today’s corporations: many corporate boards and managers are doing an abysmal job. The lack of competent leadership makes our companies less competitive day by day, causing an upward spiraling trade and current account deficit, as well as a near meltdown of the financial sector. The buildup of incompetent boards and managers is the result of poor corporate governance. Poor corporate governance now threatens more than just potential shareholder value; it threatens this country’s very economic survival.

To paraphrase Winston Churchill, "democracy might not be the greatest system there is but it is the greatest system mankind has invented so far." Many American corporations are dysfunctional because corporate democracy is a myth in the United States. They run like a decaying socialistic state. Our boards and CEOs exist in a symbiotic relationship where the boards nourish the CEO with massive stock options that are re-priced downward if the companies stock declines - making them forever valuable. They reward the CEO with pay packages and bonuses when the stock is floundering or the CEO is leaving the company. Corporate performance and the shareholders welfare seldom enter the picture. What kind of democracy is this? There is no accountability.

The inherent quid pro quo is to pay the board huge retainers for attending several meetings per year and rubber stamp ill conceived CEO proposals. In turn, a CEO can fly around the world on the company’s private jet on the "business" of visiting all the world’s greatest golf courses while he runs the company – and the value of your stock – into the ground. The average shareholder can do nothing about it. A great example is the subprime mortgage mess that has cost our economy and the populace untold billions of dollars and personal hardship. These losses did not stop boards from awarding huge severance packages to the CEOs most responsible for the current carnage.

It is the board’s responsibility to hold a CEO accountable, and remove the CEO if he or she is not producing results. But exacting such a measure requires effort and strategic consideration, and boards are often too lazy and/or passive to rock the boat, especially since the company will continue to pay and pamper and even indemnify them under almost any circumstances. Board members receive expensive tickets to important sporting events, the theatre, and are also treated to use of the company’s fleet. Worst of all, the board itself is not made accountable because corporate board elections are generally a joke.

Board meetings are often a complete travesty. I know because I have sat and do sit on a number of boards where I am in the minority. Because of this, today our economy is in a major crisis. Many of our companies are incapable of competing. Additionally our banking system has issued mortgages that cannot and will not be paid back. We are in this situation because there is no leadership in the executive suite. Why did we get here? Because in corporate America there are no true elections. It is tyranny parading as democracy. It’s a poison running through the blood of corporate America. Perhaps, with enough public support, the lawmakers and regulators will take note.

When you rid a company of a fruitless board, the rewards are often enormous because the underlying company and its employees can be excellent. It is the top level management that hangs like an albatross around the company’s neck. Years from now historians will marvel why we the shareholders – the legitimate owners of companies – did not do something effective about removing terrible managements. We can do something about the current situation. I will discuss in future entries how simple it can be and what has constrained us from taking action.

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Peter Rost, M.D., is a former Pfizer Marketing Vice President providing services as a medical device and drug expert witness and pharmaceutical marketing expert. Judge Sanders: "The court agrees with defendants' view that Dr. Rost is a very adept and seasoned expert witness." He is also the author of Emergency Surgery, The Whistleblower and Killer Drug. You can reach him on rostpeter (insert symbol) hotmail.com. Please read the terms of use agreement and privacy policy for this blog carefully.